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Hungary govt raises 2013 deficit target

Hungary's government expects a general government deficit of 2.7% of GDP in 2013, National Economy Minister György Matolcsy said on Friday.

The original 2013 budget bill targets a deficit of 2.2% of GDP.

Matolcsy said the government is raising the 2012 deficit target to 2.7% of GDP as well, from 2.5%.

The new deficit target is the result of a HUF 397 billion balance improvement program approved by the government, he said. To ensure the target is achieved, the government will freeze HUF 133 billion in this year's budget, he added.

He said the government now expects the economy to grow by 1% in 2013 instead of the earlier seen 1.6%.

The government will introduce a 0.3% tax on ATM withdrawals, he said. It will also raise the targeted amount generated from the financial transactions duty on the State Treasury by HUF 30 billion to HUF 40 billion, but the duty will not be applied to the National Bank of Hungary, he added.

The government expects HUF 95 billion more in revenue from VAT next year as the National Tax and Customs Authority (NAV) will establish online connections with retailers, he said.

The government will scrap the ceiling on social insurance contributions, generating an additional HUF 51 billion in revenue, Matolcsy said. It will postpone an increase in teachers' wages from September of next year to January 2014, he added. The measure will generate savings of HUF 73 billion.

The government will establish an upper limit on social subsidies paid by local councils from 2013, he said. It will also cut European Union co-financing from 15% to %c next year, he added. The move will result in savings of HUF 55 billion.

Matolcsy said that 22,000 public sector jobs would be cut from 2013 with the restructuring of the local council system and the takeover by the state of local schools and hospitals. He added that in some parts of the public sector, positions left empty by retiring employees would not be filled for the next three years.